How Much Do You Need to Make to Afford a House in Dallas?

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From staff reports

How much do you need to make per year to afford a home in Dallas? According to one report, less than $60,000.

But is that true? According to CNBC Make It, they’ve identified 15 cities where the qualifying income to purchase a home with 10 percent or 20 percent down is an annual salary of $60,000 or less. 

They’ve based this determination on data from the National Association of Realtors’ Metropolitan Median Area Prices and Affordability index. It also assumes a 4.1 percent interest rate, and a monthly principal and interest payment that is 25 percent of a homebuyer’s income, or less.

According to CNBC’s number crunchers, Dallas made the list. And it’s not too surprising, after all, another study from Zillow found that someone with a high school diploma and no college hours at all could afford (in theory) to buy a home in Dallas. 

“A mortgage on the typical U.S. home consumed just 16.8 percent of the country’s median household income in the first quarter, down from 17.6 percent in the fourth quarter 2018 and below the 21 percent average from 1985 through 1999,” the Zillow report said. “All those ratios are well below the long-standing rule of thumb that says housing should cost no more than 30 percent of a household’s income.”

In Dallas, where the median home price is around $275,400, you would need a yearly salary of $58,033 if you put down 10 percent, and $51,585 if you put down 20 percent.

The figures also don’t factor in the task of saving for a down payment, which statistically can take seven years or more in many areas. For renters, who may be paying 27.8 percent of their income on rent, saving can be especially arduous.

In fact, a recent Bankrate.com study that looked at how hard it is for Dallasites to save an emergency fund of six months or more also somewhat showed how hard it would be to save the $55,080 that would be 20 percent of the median home price.

A Dallas-area household can theoretically save up to $9,704 of its $56,671 annual take-home pay, Bankrate said, which means it would take 29 months to achieve the area’s average recommended emergency fund of $23,484, enough to cover six months of living expenses.

In other words, for a renter making the median income in Dallas to save enough for a down payment, it would require a great deal of time.

Dallas wasn’t the only Texas city to make the list, though. It would take a salary of $50,321 if you put 10 percent down on a home in San Antonio, and $44,730 to put down a 20 percent down payment, with a median home price of $238,800. To afford a median-priced home in Houston ($249,400), you would need to make $52,554 to put 10 percent down, and $46,715 to put 20 percent down.

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